Marketing

Grain Outlook Weather in Brazil pushes corn to unfamiliar heights

Livestock Angles Livestock markets ripe for change in direction

The following marketing to 36 percent last year and The livestock markets are Covid lockdowns are being analysis is for the week end- the three-year average of 39 at a very interesting juncture relaxed. The other reason has ing April 30. percent complete as of April as we approach the end of the been the fear of increased CORN — Borrowing a quote from Bette Davis in All About Eve to describe the markets, “fasten your seatbelts, it’s going to be a bumpy night.” Anxiety over the lack of rain on Brazil’s safrinha corn crop as they enter pollination and their dry period, in combination with strong PHYLLIS NYSTROM CHS Hedging inC. St. Paul 29. The Buenos Aires Grain Exchange rated Argentina’s corn crop at 41 percent good/ excellent, up 4 percent from the previous week. The U.S. corn planting pace was slightly behind average at 17 percent complete as of April 25 vs. the 20 percent average. Emergence was on month of April. The cattle market (including feeder cattle) has been under some pretty good selling pressure and has appeared to establish a top at this time. On the other hand, the hog market has been on a streak to the upside through the month. The volatility in the liveJOE TEALE Broker Great Plains Commodity Afton, Minn. inflation due to the heavy government spending which is taking place at the present and in the future. The interesting point to this is the movement of boxed beef has slowed as the prices have risen — which is indicating a slowing demand for beef at higher prices. demand and a lack of country movement, pushed corn to lock up the 25-cent daily trading limit in the May and July contracts to start the week and to eight-year highs! July corn locked limit up to end the week also. The May contract is in delivery and has no daily trading limits. We also saw the May trade limit up and the July contract limit down during the same session at mid-week. pace at 3 percent vs. 4 percent on average. The weather forecast into the middle of May looks favorable for planting; albeit temperatures may stay slightly below normal. Drought conditions in the United States are not improving according to the latest drought monitor. Dryness was increasing over Iowa and Minnesota with 34 and 25 percent respectively of each state experiencing topsoil that is dry to stock markets has picked up immensely during the month and is likely to continue in the weeks ahead. Each category, whether it be the hog complex or the cattle complex, is at levels that could see a sharp change in their respective direction at any time during the weeks ahead. This could make for an interesting change in these respective markets as we move into the month of May. A temporary plus to the cattle market was the release of the U.S. Department of Agriculture’s Cattle on Feed report released April 23. This report was seen as slightly friendly as the placement number was lower than expected. This could bring back some optimism to the market on a short term basis. However, the market will be focusing on the demand side of the market to bring about a return to Nearby, corn punched through $7.00 for the first time since July 2013 and December corn traded to its highest level since February 2013. The inverse between the May and July contracts traded as wide as 63 cents as the May contract headed into delivery and month-end approached. Processors are the market, but exporters also need very dry. The maps indicate 22 percent of U.S. corn areas are experiencing some level of drought and 19 percent of the soybean areas. Also beginning to attract attention is the drought in key corn producing areas in Mexico. Mexico set a record for Q1 corn imports at 4.2 million metric tons with nearly all of it coming from the United States. A The cattle market has definitely changed direction over the past several weeks as it would appear the cattle have topped during the first week of April. The interesting point is that the beef cutout has continued to rise to levels not seen for many months. Demand has driven the beef cutouts for several reasons. The firs is the higher prices. The hog market has continued the streak to higher prices since the month of November last year to levels not seen since 2014. Demand for pork — both domestic and foreign — has been one of the catalysts behind the strength in the market through this rally. Another reason was the contrast in supplies in their pipeline. Country sell- See NYSTROM, pg. 17 reopening of many restaurants as the price between beef and pork during the ing was very quiet except for a few past year enticed more buying in pork periods of new crop selling at new con tract highs. Normally, in bull markets, we experi Cash Grain Markets than in beef. However, as the prices between beef and pork have narrowed during the past several months, pork ence periods of consolidation and this is corn/change* soybeans/change* demand has shown signs of weakening. likely what we experienced for a few St. Cloud $6.97 +1.10 $15.33 +1.06 With the hog market overbought, the days this week. Brazil’s safrinha corn Madison $6.94 +1.15 $15.40 +.95 possibility of a correction in the near crop is declining and any rain in the Redwood Falls $7.01 +1.10 $15.53 +.86 future looms over the market as we next few weeks may be too little, too late to be of any real help. Private estimates are coming in sub-100 mmt. Safras & Mercado cut its Brazilian Fergus Falls Morris Tracy $6.95 $7.02 $6.95 +1.03 +1.11 +1.06 $15.12 $15.18 $15.61 +.85 +.81 +.90 approach the summer months. History would suggest the hog market (on a percentage basis) typically weakens into the fall months after spring rallies. corn outlook to 104.1 mmt from its pre- Average: $6.97 $15.36 At this point, chances are increasing vious 112.8 mmt forecast. The U.S. Department of Agriculture’s last esti- Year Ago Average: $2.65 $7.69 that prices could weaken in the future weeks. v mate was 109 mmt. Argentina’s ag Grain prices are effective cash close on May 04. secretary placed Argentina’s corn harvest at 28 percent complete compared *Cash grain price change represents a two-week period.

NYSTROM, from pg. 16

Mexican consultancy is estimating Mexico will import 17.6 mmt of corn this year vs. USDA at 16.5 mmt.

Weekly export sales were as expected at 20.5 million bushels for old crop and 21.8 million bushels for new crop. Total old crop sales stand at 2.67 billion bushels when the USDA is projecting total sales for the year at 2.675 billion bushels. Total shipments have reached 60.8 percent of the USDA’s forecast. China has 492 million bushels of unshipped U.S. purchases left to take. New crop sales commitments are 105.7 million bushels compared to 106.9 million bushels last year at this time.

Weekly ethanol production increased 4,000 barrels per day to 945,000 bpd. Stocks declined 700,000 barrels to 19.7 million barrels. Net margins dropped 12 cents to 4 cents per gallon. Ethanol stocks are estimated at 19.7 days of usage when 20 days of usage is considered very low. Gasoline demand remains behind 2019 (pre-Covid) levels at 8.877 million bpd. This is down 3.8 percent for the same week in 2019. The four-week average gasoline demand is up 67.5 percent from last spring during Covid.

Interesting note this week from Bloomberg and Princeton University relating to President Biden’s plan for the United States to be emission-free by 2035. The United States would need to increase carbon-free capacity by at least 150 percent. Raising wind and solar capacity by 10 percent annually until 2030 would require land equal to the state of South Dakota. The President’s plan for the United States to be carbon free by 2050 would require up to four additional South Dakotas to produce enough clean power to supply electric vehicles, factories, etc. Outlook: The Chicago Mercantile Exchange revises daily trading limits twice a year, at the beginning of May and the beginning of November. The new daily trading limit for corn is 40 cents per bushel effective May 2. New contract highs were set this week across the corn: July at $6.84 and December at $5.93 per bushel.

The quickness of corn’s ascension to eight-year highs was astounding! For the month, July corn soared $1.25.75 and for the week it was up 40.75 cents, closing at $6.73.25 per bushel. December corn was up 86.25 cents for the month and up 13 cents for the week at $5.63.75 per bushel. The corn market needs to balance the U.S. planting progress/development against demand and a shrinking Brazilian safrinha corn crop. Corn needs to attract acres, too. Is the rationing of old crop bushels complete? This week’s action doesn’t indicate that has occurred.

We will see our first 2021-22 balance sheets on the May 12 World Agriculture Supply and Demand Estimates report. How low will the 2020-21 carryout be cut? Will the USDA stick with an initial 2021-22 corn yield of 180 bushels per acre? The Dakotas are in drought conditions and those states are projected to see the largest increase in year-on-year corn acreage after last year’s high prevent plant acres. From a historical view, December corn has made its contract high in April just four times since 1973 and just three times in May. Supportive factors continue to be strong export and domestic demand, very slow farmer selling, non-ideal weather in Brazil and parts of the United States, and positive crush margins. Funds remain heavily long and haven’t been given a reason to rush to exit, although there was moderate profittaking into the end of the month. SOYBEANS — Soybeans weren’t left behind as a new week began and soyoil, meal, corn, and wheat surged higher. New contract highs were seen across the soy complex with July soybeans reaching $15.74.75 and November hitting $13.84.75 per bushel. Soyoil has been leading the way, but it reversed into consolidation late in the week, then reversed higher again with the July soyoil closing limit up at the end of the month. On the continuous chart, soybeans traded over $16.00 per bushel for the first time since July 2013 and on just the November contract since September 2013.

Weekly export sales for old crop exceeded expectations at a seven-week high of 10.7 million bushels, bringing total sales commitments to 2.25 billion bushels. The USDA’s export forecast is 2.28 billion bushels. We need less than 4 million bushels of sales per week to hit the target with just over four months left in the marketing year. China has just 28.1 million bushels of U.S. purchases yet to ship. New crop sales were very good at 16.1 million bushels. Total new crop sales are 243.6 million bushels vs. just 38.5 million bushels last year.

Argentina made the decision to continue river dredging operations for another 90 days on the Parana River despite the country’s tight financial situation. The current dredging contract was due to expire at the end of April. The dredging allows for more bushels to be shipped per vessel and keeps exports flowing from the Rosario port. As of April 29, Argentina’s ag secretary put its soybean harvest at 41 percent complete compared to last year’s 63 per-

cent complete and the three-year average of 55 percent complete. The BAGE pegged Argentina’s soybean crop conditions at 9 percent good/excellent, unchanged from the prior week. China found new cases of African swine fever, the 10th new officially reported outbreak this year. The U.S. attaché in China believes African swine fever outbreaks will slow their swine production recovery until at least the middle of this year. Effective May 1, China is restricting the movement of live animals to try and control outbreaks. Breeding sow populations were down 20-50 percent in various regions which have experienced new outbreaks. Outlook: The same drivers in corn affect soybeans. Bull markets go through periods of pullbacks/consolidation. This week’s setback may be viewed as such, along with month-end profit taking. Unexpected deliveries against the May soybean contract lent pressure at the end of the month, but that was quickly thrown aside. The soybean balance sheet on the May 12 WASDE will be expected to show tighter ending stocks. We haven’t yet rationed the soybean supply when we have four months left in the marketing year. Heavy fund buying at month-end propelled July soybeans to close 18.25 cents higher for the week at $15.34.25 per bushel and cut losses in November to 1.75 cents for the week at $13.39.75 per bushel. For the month, July soybeans rallied $1.06.5 and November gained 83.5 cents per bushel. History shows November soybeans have made their contract high in April just twice since 1973 — in 1986 and 1981. Nystrom’s notes: Contract changes for the week as of the close on April 30 (July contracts): Chicago wheat up 22.5 cents at $7.34.75, Kansas City up 23 cents at $7.03.5, and Minneapolis jumped 38.25 cents to $7.63.75 per bushel. For the month, Chicago was $1.19 higher, Kansas City $1.21.75 higher, and Minneapolis skyrocketed $1.43.25 per bushel. v Time for alfalfa stand assessments

FOLEY, Minn. — Alfalfa stands need to be assessed each spring for winter injury. For stand assessments we need to focus on two-parts: stem counts and root and crown health.

With stem counts, we usually measure this as stems per square foot. The relationship between stem density and yield is constant, making this method reliable in estimating yield. To perform a stem count, mark off a 2 square-foot section in each area you take a count. Count only those stems which are 2 inches or taller. Divide your count by 2 and average across all section. This will get you to the necessary stems per square foot needed to check yields. Typically, stem counts over 55 stems per square foot indicates a good stand.

When it comes to assessing stands visually, typically we would start from the top down. Looking at the tops of alfalfa plants, we look for symmetry of the buds coming from all sides of the crown. Asymmetrically plants indicate winter injury did occur and yield potential may be lower. At this point you will also want to check to see if the root system is up out of the ground. Alfalfa taproots which have been pushed out of the ground by over an inch will most likely be short lived. Next, dig up plants from three or four representative locations in the field including at least the top 6 inches of the taproot to examine. Cut the crown in half and examine the color and rigidity of the inside of the crown. You want to see a firm, off-white interior with little to no signs of rotting.

This article was submitted by Nathan Drewitz, University of Minnesota Extension. v

By TIM KROHN Free Press Mankato

With conditions staying dry this spring, farmers have had plenty of opportunity to plant corn and soybeans. Their only decision was whether they wanted to.

“There’d be more corn in if it wasn’t so cold,” said Tom Hoverstad of the University of Minnesota Southern Research and Outreach Center in Waseca.

“Most people can get all their corn planted in about 10 days. But some chose to wait for it to warm up a little.

“For a month that started out terrific, we’ve really cooled off. We had record warmth the first half of the month and the last half has been cooler than normal,” Hoverstad said. “And there’s been persistent clouds.”

The much warmer weather that started April 29 has kicked planting into high gear.

“Dry conditions are a whole lot better than a wet spring.” Hoverstad said crops don’t demand much water at this stage to get started. “If you’re going to be on the dry side, this is the time to have it.” Helvig said that despite the dry conditions the soybean seeds he planted are swelling up and ready to sprout. “But we do need some heat.” Hoverstad said the Waseca area has been drier than other areas. They only had 0.62 inches of rain in April, which is 2½ inches below normal for the month. While Waseca got just one-tenth of an inch Tuesday night, much of the Mankato region saw about one-third of an inch to threequarters of an inch of rain. Areas farther to the west and south Photos by Pat Christman A farmer works in a field south of Mankato on April 26. The dry spring has given farmers plenty of opportureceived an inch or more. nity to plant corn and soybeans but they are hoping for some more sun and heat to get things growing. The weekly crop progress report released last week by the National Dan Helvig, who farms near Truman, had about a third of his corn in the ground by late last week and he’s planted some soybeans. Agricultural Statistics Service, an arm of the U.S. Department of Agriculture, shows planting in the Upper Midwest is close to or above the five-year average for corn, soybeans and wheat.“There are a lot of people who are done (with corn), some haven’t started, and some are half-way done,” Helvig said of his neighbors. The Free Press and The Land are sister publications owned by The Free Press Media. v Fresh earth is exposed by a farmer digging a field near Nicollet a week ago. While temperatures have been cool, the dry weather is favored over a wet spring that makes planting difficult.

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Markets better equipped this time around

ZEMAN, from pg. 13

shields vs. masks? How do we safely transfer products and other necessities like money from customers to vendors? What are safe limits in terms of numbers of customers that should be allowed at one time at the market? Can we safely offer food sampling?”

The questions were myriad and seemingly insurmountable — especially because people couldn’t get together to talk them through. The MFMA, like so many organizations, took to zooming.

“We regularly had over 150 people weekly,” Guenther said.

The key to the success of those Zoom conferences was that state regulators were invited to attend and work through the implementation of the protocols with the farmers and market managers. University of Minnesota Extension was there. So were the Departments of Health and Agriculture.

“We’d start those Zooms by saying what we know today and things were changing rapidly,” Zeman said. “Then somebody would say, ‘what about this?’ and we’d problem-solve on the spot. We’d welcome people to say what are you worried about, what are you thinking about. If the regulators couldn’t answer questions, they’d get back to us later and then we’d send out emails to about 3,000 people as fast as we could. The State was very responsive.”

This coming market season will open with a clearer understanding of the science necessary to protect ourselves from Covid-19. Outdoor markets with adequate spacing for vendors won’t require people to wear masks. In general, live music, food sampling, and food service won’t be allowed. Masks will be required for indoor markets.

“We are trying to keep people from lingering,” Zeman said.

You can learn more about the Minnesota Farmers Market Association and its services — such as vendor training and group liability insurance — by visiting their web site at https://www.mfma.org. v